Fault lines at the Brussels EU summit, and yesterday's world's financial plan

At the EU summit held in Brussels on Thursday and Friday, heads of state and government failed to agree on the Union's next seven-year budget, while a new €70 billion hole opened up in Ukraine's financing. There was an open clash over energy prices and migration, and the leaders showed striking unity on only one issue: they stood by Volodymyr Zelensky in the dispute that erupted with the Trump administration. According to Euronews, the second day dragged on so long that several leaders left the building before the debate ended, which is a rarity at EU summits. On top of all this, the entire deal is overshadowed by elections in the coming months that could upend it at any time.

The Union's seven-year budget, technically known as the multiannual financial framework, determines how much the Union can spend and on what between 2028 and 2034. Last summer the European Commission put forward a draft of roughly €2,000 billion, considerably more than the current framework. The increase is justified partly by the fact that from 2028 the EU budget will have to start repaying the recovery loan jointly taken out after the coronavirus pandemic, and partly by the need for funding for new tasks: the Commission would create a competitiveness fund to support research, industry and defence, and would allocate more to external action, including Ukraine.

The Irish presidency's compromise proposal would have cut the framework to €1,622 billion at 2025 prices, eight percent less than the Commission's plan but still roughly 30 percent more than the current budget. The proportions behind the figures tell the real story: the €914 billion earmarked for agriculture, cohesion and fisheries — more than half of the entire framework — would have been cut by barely three percent. Of the €456 billion allocated to competitiveness, research and defence, however, 13 percent would have been trimmed, and of the €157 billion earmarked for cooperation with third countries, 17 percent. The Irish proposal would thus have tightened the belt precisely in the areas on which the continent's future depends, while leaving the old structure almost untouched. According to Mario Draghi's 2024 competitiveness report, Europe would need to invest €750–800 billion more a year to keep pace with the United States and China, and the situation has only worsened since then. China is dumping its own overproduction onto the European market, having sold the Union €360 billion more last year than it bought from it, while it is becoming ever more obvious that Washington can no longer be relied upon: Trump is striking a deal with the Kremlin over Russian diesel and threatening Kyiv with the withdrawal of intelligence data. A budget that responds to this world by cutting research, defence and foreign policy so that land-based subsidies can remain virtually untouched is not being prepared for the next seven years, but is preserving the last twenty.

Who pays how much for all this follows from the system of contributions: every member state pays into the EU coffers in proportion to its gross national income, so a bigger budget means a bigger contribution for everyone, the only difference being how much each gets back. Net contributors, including Germany, Sweden and the Netherlands, pay in more than they receive in support, so they would be hit hardest by the increase. Swedish Prime Minister Ulf Kristersson declared at the summit that his country would not accept a 60 percent rise in its national contribution, arguing that the same handful of countries cannot keep being milked, since, in his view, they provide about 70 percent of the support given to Ukraine and 40 percent of the EU budget. Dutch Prime Minister Rob Jetten says the burden-sharing is unfair, and the six “frugal” countries led by Germany are demanding cuts worth several hundred billion euros, with the remaining money to be focused on defence and competitiveness. Net beneficiaries, including Romania, Hungary and Poland, receive more money from the Union than they pay in, so for them a bigger budget is an overall gain.

Member states' contributions would also be reduced through new EU own resources, which under the Irish proposal would bring in about €55 billion a year. These would include a border levy on carbon-intensive imports, a share of the revenue from emissions allowances, a tobacco excise duty, a contribution from large corporations, and a fee on electronic waste. The European Parliament also proposed taxing digital services, online gambling and crypto-assets, but the Irish draft left these out. The channelling of emissions-allowance revenue into the EU budget would be introduced only gradually for the less developed member states supported by the Modernisation Fund, because these countries, including Romania and Hungary, objected to giving up these funds. The Modernisation Fund has existed since 2021 precisely to let poorer member states modernise their energy systems using revenue from emissions trading; its biggest beneficiaries are Poland, the Czech Republic and Romania, on top of which came the billions for energy efficiency from the cohesion and recovery funds. The results, however, are modest: Romania's own 2020 renovation strategy acknowledged that only six percent of the country's buildings had been renovated over the previous ten years. In Hungary, according to a Telex compilation, about two-thirds of residential buildings fall into the worst energy category, heating one square metre takes one and a half times as much energy as the EU average, and a quarter of households heat with wood. These countries have thus been receiving money for a decade and a half to prepare for the price of carbon, yet much of that money has flowed away through the well-known channels of public procurement circles and crony companies — and now the same countries are asking for a grace period so they can keep the allowance revenue, with net contributors covering the shortfall, paying out of their own pockets for what others failed to spend on the intended purpose.

The Irish proposal has failed — according to Euronews it is “officially dead” — so negotiations will now be taken over by António Costa, President of the European Council, who will present a new plan ahead of the extraordinary summit called for 26 November. In it, member states' contributions would be kept as low as possible, own resources would be expanded along the lines of Parliament's proposals, and the flexibility instruments that the Irish had removed would be restored. Since the seven-year budget requires the unanimous approval of all member states plus the consent of the European Parliament, the deal could still collapse over the resistance of a single country, and more and more leaders are openly saying they do not feel bound by the December deadline — Kristersson says a deal will not come together this month, and perhaps not even by the end of the year, while Giorgia Meloni told the Italian Senate that the date cannot be more important than the content, and that she will sign only a deal that is advantageous for Italy.

Ukraine's money, Trump's diesel
and Bulgaria's separate path

On the second day, Zelensky told the leaders that the war will cost €155 billion next year, and that he is asking Europe for at least €70 billion extra for defence, weapons, and to help the country withstand Russian strikes. The request upsets the EU's calculations, because the €90 billion loan approved last year was designed to be sufficient for both 2026 and 2027. Ursula von der Leyen accepted the Ukrainian estimate but indicated that the Union will not pay the full amount on its own, and the leaders tasked the Commission with working out solutions. According to Euronews, this will not be an easy task, because joint borrowing is expensive due to high interest rates, using frozen Russian assets is politically divisive, and bilateral contributions would shift the burden onto a few wealthy member states.

Slovakia, Hungary and the Czech Republic have announced that they will opt out of the €70 billion package, just as they previously opted out of the €90 billion loan. The same three countries are fighting to preserve cohesion funds in the budget dispute and are objecting to new EU revenue sources, especially allowance revenue. Péter Magyar's government is chalking it up as a success that, under the latest proposal, Hungary would receive about €1 billion more while its contribution would not rise. So solidarity is taken for granted as long as they are the ones benefiting from it, but when an attacked country needs it, suddenly every euro cent becomes a question of national sovereignty. It is hard to call fair a Union in which Swedish and Dutch taxpayers finance both Slovak motorways and Ukraine's air defence at the same time, while Bratislava, Budapest and Prague only ask for the former.

The question of Russian assets divides the member states most sharply. Denmark, Latvia, Sweden and Ireland are openly pushing for the roughly €200 billion in frozen Russian state assets to be used to support Ukraine, and according to Euronews, Germany, Spain, the Netherlands, and the Nordic and Baltic states also support using them. Belgium, where the bulk of the assets are held, continues to reject the plan because it is not getting unlimited guarantees from the other member states, and France and Italy are also hesitant — but everyone who spoke agreed on one thing: they reject the idea coming out of Washington of placing part of the assets in a fund under American oversight. Finnish Prime Minister Petteri Orpo said this is simply out of the question, Christian Stocker cited the unpredictability of American policy, and Friedrich Merz declared that the assets are frozen in Europe and will stay there.

A separate sentence was added to the final statement expressing the European Council's regret that the United States has temporarily lifted sanctions on Russian diesel. Von der Leyen declared that the Union will not lift a single sanction until Russia ends the war, and that work is already underway on the 22nd sanctions package. According to EU foreign policy chief Kaja Kallas, cooperation with the United States on Ukraine is currently “very difficult,” and she called the diesel deal itself a gift to Putin, coming at a time when Russia is intensifying its bombing campaign. The unity broke down on one single point: as he arrived at the summit, Bulgarian Prime Minister Rumen Radev had already come out in support of the Trump-Putin diesel deal , arguing that Europe's biggest problem is high fuel prices and that any step that lowers them should be welcomed; he also opposed Ukraine striking Russian refineries, and recently said that the Union's strategy of “peace through force” has failed. Last spring, Politico still considered Slovakia's Robert Fico the most likely successor to Viktor Orbán in the role the ousted Hungarian prime minister had played at the EU table as Putin's puppet on a string, and the same list also included Radev, who in 2025 called Ukraine doomed to fail. It has now become clear that the Bulgarian prime minister is taking on this role most openly of all. Bulgaria ranks 84th out of 182 countries with 40 points on the latest Transparency International corruption index , tying with Hungary for last place in the Union . According to Eurostat's preliminary 2025 data, its GDP per capita at purchasing power parity is 68 percent of the EU average, the lowest in the Union together with Greece, and the country has received billions from Brussels since joining — without which many of its roads, water systems and hospitals would still be in the state they were in in the 1990s. Radev is now repaying all this by siding with Washington and Moscow on the day of the summit, confident that Sofia will again receive a significant sum from the next seven-year framework.

Allowances, energy prices and China

On the first day, the leaders spent nearly the entire day arguing over the passage on energy. The Visegrád Four and Italy, and to a lesser extent Greece, wanted the Commission to propose measures to curb short-term swings in electricity prices and to review the carbon emissions trading system. The system has been in operation since 2005 and is based on the “cap and trade” principle. The Union sets a total limit on how much carbon dioxide power plants, heavy industry and aviation (shipping has been included since 2024) may emit, and issues emission units, commonly known as allowances, for that amount. For every tonne of carbon dioxide emitted, one allowance must be surrendered, and anyone who pollutes less can sell their surplus allowances to someone who pollutes more. The total number of allowances falls year by year, which puts a price on carbon emissions, and that price — at least in theory — encourages companies to switch to cleaner technology; revenue from allowance auctions goes to the member states, and this is also what feeds the Modernisation Fund.

The Czech Republic, Hungary, Slovakia, Poland, Italy and Greece also proposed postponing the introduction of the second emissions trading system until 2030. This second system no longer applies to factories and power plants but to the fossil fuels used for heating homes and offices, as well as to road fuels. The allowances must be purchased by fuel distributors, who are expected to pass the cost on to consumers at petrol stations and through gas bills. The system was originally supposed to start in 2027, but member states already pushed it back by a year last December, to 2028. In Hungary, according to estimates by REKK, fuel prices could rise by 10–12 percent and natural gas prices by 8–10 percent; an EU model calculation puts the extra burden on an average household at €300–500 a year, though this burden would be cushioned between 2026 and 2032 by a Social Climate Fund mobilising at least €86.7 billion, of which Hungary would receive €2.8 billion for renovations, heating upgrades and direct support for those in need. The postponement failed in the face of resistance from Finland, Denmark and Sweden, and the six countries only managed to get the Commission to carry out an impact assessment. According to Euronews, Rome and the Visegrád countries knew they did not have a qualified majority to reopen the emissions trading system, so the fight was primarily aimed at domestic audiences, and one EU official said the summit produced no new measure or policy that would actually help with member states' problems. Péter Magyar, by contrast, called the impact assessment a breakthrough — a bold choice of words, given that none of the initiators' goals were met.

Giorgia Meloni and Kyriakos Mitsotakis also asked Brussels to loosen the budgetary rules so that governments could use targeted measures to ease the energy crisis — Meloni had already requested this in a letter to von der Leyen in May. She proposed that the national escape clause, which currently excludes defence spending from deficit rules, be temporarily extended to cover energy investments and emergency price support as well, while keeping the ceiling on the permitted deviation unchanged. Her argument is that security cannot be understood solely in military terms, and that it is impossible to explain to voters that the Union is flexible when it comes to tanks but rigid when households and businesses need to be protected from another energy crisis. The argument carries some weight, since the energy prices unleashed since the Iranian war represent an external shock just like the Russian threat, and the security of energy supply really is part of national security. At the time, the Commission promised only to examine the existing flexibility, and pointed out that €95 billion is available within EU funds for energy purposes — a clear sign that Brussels would rather see already allocated but unspent money put to use than see new debt generated.

The trade deficit with China
has produced rare agreement

Last year the Union bought €360 billion more from China than it sold to it — well over €1 billion a day — and Chinese exports are, moreover, pouring into exactly the sectors that form the backbone of European industry. According to Denis Redonnet, the Commission's chief trade enforcement official, machinery manufacturing, textiles, base metals and chemicals are all seeing a persistent and abnormal surge in imports driven mainly by China, and German industry is bearing the brunt of it, with Volkswagen among those announcing significant layoffs. According to OECD estimates, between 2005 and 2024 Chinese companies received three to eight times as much state support as companies in OECD countries, and last year Beijing showed, by restricting rare-earth exports, that it can also use supply chains as a weapon — several Western plants had to cut production as a result. The leaders therefore asked the Commission to expand the trade defence toolkit and ensure that the Union has every instrument it needs to protect its interests and reduce risk. The final statement diplomatically does not even name China, speaking only of a dialogue to be held with “major economic partners.” The debate was based on a joint letter from Emmanuel Macron and Friedrich Merz, which, according to a report by the Wall Street Journal, proposes a new instrument that could be deployed within days if a trading partner deliberately distorts the EU market, allowing measures up to and including immediate exclusion from the single market. The model for the proposal is Section 301 of US trade law, which Trump used for his sweeping tariffs; in Macron's words, Europe needs a “European equivalent” of it, because its sovereignty is at stake. Paris and Berlin also want to activate the existing but never-used anti-coercion instrument, which currently requires a qualified majority of member states to deploy — that is, at least half the countries, representing at least 65 percent of the Union's population. Under the proposal, the Commission itself would in future be able to trigger it, and only a qualified majority of member states could stop it — reversing the logic and making the instrument far easier to use.

The significance of this shift lies in the fact that Germany, which for years held back tough action against China because of its economy's exposure, is now open to new instruments, provided they do not name any single country. Agreement, however, is not complete. Spanish Prime Minister Pedro Sánchez is pushing for balanced relations and bridge-building with Beijing while also seeking Chinese investment, while Irish Prime Minister Micheál Martin wants to see what shape the new mechanisms take before committing, and has warned of the consequences. The risk is real: when the Union raised tariffs on Chinese electric vehicles in 2024, Beijing hit European cognac with an anti-dumping duty, and according to Rhodium Group analyst Noah Barkin, retaliation can be expected again this time too. Yet the deepest contradiction lies within Brussels itself: one day the leaders describe Chinese pressure as an existential threat to European industry, and the next they are haggling over a budget proposal that would cut the most precisely from the money earmarked for competitiveness and research.

The sharpest debate of the second day was about migration. Denmark, Italy and Poland proposed amendments to the closing statement that covertly targeted Spain, because Madrid intends to regularize the status of roughly six hundred thousand undocumented migrants. The three countries wanted the text to state that measures encouraging illegal immigration must be avoided, but the proposal was ultimately rejected, and a shorter, milder text was adopted instead. Danish Prime Minister Mette Frederiksen asked the Commission to examine what happens when a country does almost the opposite of what the others do, while Babiš accused Pedro Sánchez of "replacing" the population with migrants in order to stay in power. Emmanuel Macron sided with Spain, arguing that it was a bad debate, because politicizing the issue divides and paralyzes the member states, and he called the Ceuta crisis a hybrid attack. The Austrian and Swedish prime ministers welcomed von der Leyen's announcement that the Commission is drawing up an emergency procedure for crisis situations, which could even allow asylum applications to be temporarily suspended.

Romania is one of the leading players in this budget debate. Nicușor Dan is coordinating, together with Giorgia Meloni, the seventeen-member group of cohesion countries, which considers catching up poorer regions and supporting farmers its top priority. Before the summit, the head of state held a working meeting in Bucharest with members of the government and experts, after which his office announced that Romania supports an ambitious EU budget that preserves full funding for cohesion policy and the common agricultural policy. Dan had already openly stated in June that the larger the budget, the greater Romania's net benefit, so the Irish proposal, which barely trimmed these areas, would have favored Bucharest, and its collapse is rather bad news for Romania. The region's catch-up record, incidentally, is mixed and not always proportional to the money received. According to Eurostat's preliminary 2025 data, GDP per capita at purchasing power parity stands at 81 percent of the EU average in Poland, 79 percent in Romania, 78 percent in Croatia, 76 percent in Hungary, 75 percent in Slovakia and 68 percent in Bulgaria. When it joined in 2007, Romania was still at roughly 40 percent of the average, meaning it has caught up remarkably, but with 45 points on the corruption index it remains in the EU's bottom third, while Hungary, which was among the region's frontrunners when it joined in 2004, has since been overtaken by both Poland and Romania and now sits at the very bottom of the corruption index.

On the first day of the summit, Dan held talks with NATO Secretary General Mark Rutte and Bulgarian President Rumen Radev about the Black Sea ship attacks, and afterward he clearly called them an attempt by Russia aimed at destabilizing the eastern flank and reducing support for Ukraine. The next day he was more cautious, saying it was still too early to technically prove that it was a Russian attack. He also met with Macron, saying that France was the first ally to offer concrete help against Black Sea drones, and according to Bloomberg Bucharest also offered to cover part of the costs of the roughly one thousand American troops stationed in the country. The summit was also overshadowed at home by a domestic political dispute: on October 12 the Senate adopted a declaration defending the country's veto right, accusing acting Foreign Minister Oana Țoiu of wanting to give up Romania's veto in common foreign and security policy. Țoiu called the accusation false, saying Romania had merely joined ten other member states in 2023 that had called for faster decision-making, which involved no renunciation of the veto whatsoever — they only proposed that whoever vetoes a decision should explain to their partners what national interest they are invoking. She added that Romania has never used its veto, and if it had, it would not have had to wait years to join Schengen.

Péter Magyar's second regular EU summit
painted a mixed picture

In the budget, Budapest, like Romania, is a net beneficiary interested in preserving cohesion and agricultural funding. The prime minister told 444 that, according to the latest proposal, the amount offered to Hungary has not decreased, the contribution obligation has not increased, and compared with the Cypriot proposal the country would receive about one billion euros more in funding — in June he had mentioned 34–35 billion euros. He continues to insist that Hungary should be compensated for the two billion euros that it permanently lost under the Orbán government. This sounds good for domestic consumption, but the legitimacy of the claim is highly questionable. The money was not lost by accident: the Commission froze a significant portion of the cohesion funds in 2022 because it found that the independence of the Hungarian judiciary, the integrity of public procurement, and the operation of the foundations that took over the universities did not guarantee the lawful use of EU funds. Of the frozen amount, more than two billion euros was permanently lost under the "use it or lose it" rule, because it could not be spent by the deadline. On top of that there is nearly 900 million euros, deducted from Hungary's allocation as a daily fine of one million euros imposed for ignoring the asylum ruling. The new government is not responsible for Viktor Orbán's violations, but the legal entity is the same Hungarian state, and if the penalty were repaid retroactively, it would signal to every government that violating the rule of law carries only a deferred price that can be reclaimed after a change of government — which would strip the entire conditionality mechanism of its meaning. The realistic path is to recover the funds that are still frozen by carrying out the reforms, not to have the already imposed penalty written off.

On the issue of Ukraine, the Hungarian prime minister held his first one-on-one talks with Zelensky, pledged full solidarity with Ukraine against Russian aggression, and called the Ukrainian law adopted on the educational rights of Hungarians in Transcarpathia a first step toward restoring mutual trust. After the law was passed, Budapest lifted its veto, opening two more negotiating chapters with Ukraine, and the two leaders agreed to continue talks on the situation of minorities at ministerial level, with a possible meeting in Berehove by the end of the year. Zelensky was also invited to the commemoration in Budapest on October 23, marking the 70th anniversary of the 1956 revolution, and Kyiv appeared open to the idea — Zelensky himself said he had "no objection" — while Ihor Zhovkva, deputy head of the president's office, confirmed to Euronews that the president had received the invitation, adding "we'll see."

Péter Magyar then stated on Saturday that he does not expect Zelensky to come. This could have been handled more diplomatically: a host does not announce in advance that they are not expecting the invited guest, unless they want to signal that the invitation was merely a formality. All this is happening around an anniversary commemorating an uprising against a Soviet invasion, one that, according to Péter Magyar, Macron will also attend. According to Kyiv Independent, Hungary, together with Bulgaria, managed to get the phrase "as soon as possible" removed from the closing statement — a phrase referring to the further progress of Ukraine's accession talks — just as it had done in June, and together with Slovakia and the Czech Republic it is also being left out of the 70-billion-euro package. In the energy debate, Budapest sided with the Visegrád Four and Italy, and was also among the six countries requesting a postponement of the second quota system. On migration, before the summit Péter Magyar wrote that he expects a tougher stance against illegal immigration.

The elections
that could rewrite everything

The timing of the budget debate is also complicated by elections in the coming months. Spain will hold early elections on November 29, Sweden already voted in September, and the AfD's regional successes in Germany could push Berlin toward a tougher stance. In 2027, elections will also be held in France, Italy, Poland, Finland, Estonia, Slovakia and Greece. EU officials fear that if no agreement is reached by the end of the year, negotiations could drag on until autumn 2027, meaning the new programs would not start on time in January 2028.

The biggest risk is posed by next spring's French presidential election, which according to Euronews has far-right Marine Le Pen as the favorite. Le Pen promises to cut France's annual net contribution from the current roughly 8 billion euros to 5 billion, to end French support for Ukraine, arguing that the country's financial situation would allow it to sustain that support for at most six months, and she is also pushing for the lifting of sanctions on Russia. She called the end-of-year agreement on the budget antidemocratic, arguing that it is being rushed through before the elections, while Macron said at the summit that Paris wants a deal this year. Analysts say a Le Pen victory would jeopardize the entire system of EU support for Ukraine, since France could not only withdraw its own contribution but could also block EU decisions. But the stakes go beyond money. In March, Macron announced the doctrine of "extended deterrence" at the Île Longue submarine base: units of France's strategic air force could be stationed in other European countries, allied forces could take part in nuclear exercises with conventional assets, and the United Kingdom, Germany, Poland, the Netherlands, Belgium, Greece, Sweden and Denmark have already joined. Le Pen, however, already rejected in 2024 the idea that France would in any way share its nuclear deterrence with its European partners, arguing that "sharing deterrence means abolishing it," and that no nation would risk its own destruction to save another. So if she moves into the Élysée Palace next spring, Europe could lose not only a net contributor and one of Ukraine's main backers, but also the nuclear umbrella that Macron intended precisely for the situation in which the American umbrella finally folds up.

Anna Karczag, Ugar